Earnings Estimates Trends

S&P500 earnings trends and estimates are a notably important topic, for a variety of reasons, at this point in time.

FactSet publishes a report titled “Earnings Insight” that contains a variety of information including the trends and expectations of S&P500 earnings.

For reference purposes, here are two charts as seen in the “Earnings Insight” (pdf) report of January 12, 2018:

from page 26:

(click on charts to enlarge images)

S&P500 EPS forecasts

from page 27:

S&P500 EPS years 2008-2019

_____

Please Note – The above is excerpted from the EconomicGreenfield.com (published by RevSD, LLC) post of January 29, 2019, titled “Trends Of S&P500 Earnings Forecasts

_____

RevSD, LLC offers the above data and projections for informational purposes only, and does not necessarily agree with information provided by these outside parties.

—–

RevSD, LLC is a management consulting firm and strategic advisory that focuses on the analysis of current and future weak(ening) economic conditions, and offers businesses and other entities advice, strategies, and actionable methods on how to optimally adapt to such challenging, complex conditions.

The January 2018 Wall Street Journal Economic Forecast Survey – Notable Aspects

The January 2018 Wall Street Journal Economic Forecast Survey was published on January 11, 2018.  The headline is “Economists Credit Trump as Tailwind for U.S. Growth, Hiring and Stocks.”

I found numerous items to be notable – although I don’t necessarily agree with them – both within the article and in the “Economist Q&A” section.

Two excerpts:

Asked to rate Mr. Trump’s policies and actions to date, a majority of economists said he had been somewhat or strongly positive for job creation, gross domestic product growth and the stock market. Most also said he had been either neutral or positive for the country’s long-term growth trajectory, while his influence on financial stability was seen as largely neutral.

also:

Looking forward, the economists surveyed in recent days had high hopes for 2018.

On average, the forecasters predicted GDP would expand a healthy 2.7% this year. They saw the unemployment rate, which was 4.1% in December, falling to 3.9% by midyear and 3.8% in December. The pace of hiring was expected to slow further, with monthly nonfarm payroll gains set to average 165,000 in 2018. Monthly job gains averaged 171,000 in 2017 and 187,000 in 2016, according to the Labor Department.

The probability of a recession in the next 12 months ticked down in January to 13%, the lowest average since September 2015. More than two-thirds of forecasters said they saw the risks to the growth outlook as tilted to the upside.

As seen in the “Recession Probability” section, the average response as to the odds of another recession starting within the next 12 months was 13.11%. The individual estimates, of those who responded, ranged from 0% to 30%.  For reference, the average response in December’s survey was 14.12%.

As stated in the article, the survey’s respondents were 68 academic, financial and business economists.  Not every economist answered every question.  The survey was conducted January 5 – January 9, 2018.

The current average forecasts among economists polled include the following:

GDP:

full-year 2017:  2.5%

full-year 2018:  2.7%

full-year 2019:  2.2%

full-year 2020:  2.0%

Unemployment Rate:

December 2018: 3.8%

December 2019: 3.8%

December 2020: 4.1%

10-Year Treasury Yield:

December 2018: 2.98%

December 2019: 3.31%

December 2020: 3.41%

____

Please Note – The above is excerpted from the EconomicGreenfield.com (published by RevSD, LLC) post of January 12, 2018, titled “The January 2018 Wall Street Journal Economic Forecast Survey

_____

RevSD, LLC offers the above commentary for informational purposes only, and does not necessarily agree with the views expressed by these outside parties.

—–

RevSD, LLC is a management consulting firm and strategic advisory that focuses on the analysis of current and future weak(ening) economic conditions, and offers businesses and other entities advice, strategies, and actionable methods on how to optimally adapt to such challenging, complex conditions.

“CFO Signals” Report – Excerpts

Recently Deloitte released their “CFO Signals” “High-Level Summary” report for the 4th Quarter of 2017.

As seen in page 2 of the report, there were 147 survey respondents.  As stated:  “Each quarter (since 2Q10), CFO Signals has tracked the thinking and actions of CFOs representing many of North America’s largest and most influential companies.

All respondents are CFOs from the US, Canada, and Mexico, and the vast majority are from companies with more than $1 billion in annual revenue. For a summary of this quarter’s response demographics, please see the sidebars and charts on this page. For other information about participation and methodology, please contact nacfosurvey@deloitte.com.”

Here are some of the excerpts that I found notable:

from page 3:

Perceptions

How do you regard the current/future status of the North American, Chinese, and European economies? Perceptions of North America improved markedly with 74% of CFOs rating current conditions as good (up from 64% last quarter), and 56% expecting better conditions in a year (up from 45%). Perceptions of Europe rose to 35% and 33%, respectively, and China rose sharply to 49% and 41% (their highest levels in nearly five years). Page 6.

What is your perception of the capital markets? Eighty-five percent of CFOs say debt financing is attractive (up slightly from 83%). Attractiveness of equity financing decreased for public company CFOs (from 48% to 46%) and rose for private company CFOs (from 35% to 47%). Eighty-four percent of CFOs now say US equities are overvalued—another new survey high. Page 7.

Sentiment

Overall, what risks worry you the most? CFOs say constraints to their companies’ performance are mostly external, voicing strong concerns about political turmoil, policy uncertainty, and geopolitics. Talent challenges, strategy execution, and achieving growth are the top internal worries. Page 8.

Compared to three months ago, how do you feel about the financial prospects for your company? The net optimism index rose sharply from last quarter’s +29 to +47 this quarter. About 52% of CFOs express rising optimism (up from 45%), and 5% express declining optimism (down from 16%). Page 9.

Expectations

What is your company’s business focus for the next year? CFOs indicate a strong bias toward revenue growth over cost reduction (61% vs. 18%) and investing cash over returning it (56% vs. 18%). They shifted back to a bias toward existing offerings over new ones (45% vs. 35%), and indicated a bias toward current geographies over new ones (65% vs. 11%). Page 10.

Compared to the past 12 months, how do you expect your key operating metrics to change over the next 12 months? Revenue growth expectations declined from last quarter’s 5.7% to 4.7% (still above the two-year average). Earnings growth rose from 7.9% to 8.4% (well above the two-year average). Capital spending growth slid from 7.3% to 6.5%; domestic hiring growth fell from 2.6% to 2.0%. Canadian expectations trailed for almost all metrics. Page 11.

from page 9:

Sentiment

Optimism regarding own-companies’ prospects

Several industries rose sharply, but Healthcare/Pharma declined sharply.

After declining to +29 last quarter, net optimism rose sharply to +47 this quarter. About 52% of CFOs expressed rising optimism (up from 45%), and just 5% cited declining optimism (down from 16%).

Net optimism for the US rose sharply from last quarter’s +28 to +50 this quarter. Canada rose from +31 to +46, while optimism in Mexico declined sharply from +39 to zero.

Sentiment rose sharply in Manufacturing, Technology, Energy/Resources, and

Services—all of which came in above +45. Retail/Wholesale rose, but trailed the average at +29, and Healthcare/Pharma fell sharply to just +8.

Please see the appendix for charts specific to individual industries and countries.

from page 11:

Expectations

Growth in key metrics, year-over-year

Earnings growth rose on strength in the US.
Revenue, capital spending, and domestic
hiring growth all declined, largely on
pessimism in Canada.

Revenue growth declined from 5.7% to 4.7%,
but remains above its two-year average of 4.4%.
The US declined, but remains near its two-year
highs. Canada declined to well below its two-year
average; Mexico declined, but is still relatively
strong. Healthcare/Pharma and Technology lead;
T/M/E and Services trail.

Earnings growth rose to 8.4% from 7.9%. The
US leads and is well above its two-year average.
Canada declined to well below its two-year
average; Mexico declined, but is still above its
average. Retail/Wholesale, Manufacturing, and
Technology lead; T/M/E and Services trail.

Capital investment growth fell for the third
straight quarter, from 7.3% to 6.5%, but is still
among its five-year highs. The US and Mexico
rose and are well above their two-year averages.
Canada declined to well below its average.
Energy/Resources and Manufacturing are the
highest; T/M/E and Healthcare/Pharma are
lowest.

Domestic hiring growth slid from 2.6% to
2.0%. The US remains at its highest level in two
years, but Canada slid to its lowest level in a
year, and Mexico slid sharply to its lowest level
in two years. Healthcare/Pharma and Services
lead; Energy/Resources and T/M/E trail. Wage
pressures are again evident in Mexico.

Please see the full report for charts specific to
individual industries and countries.

Among the various charts and graphics in the report are graphics depicting trends in “Own Company Optimism” on page 9 and “Economic Optimism” found on page 6.

_____

RevSD, LLC offers the above commentary for informational purposes only, and does not necessarily agree with the views expressed by these outside parties.

—–

RevSD, LLC (revsd.com) is a management consulting firm and strategic advisory that focuses on the analysis of current and future weak(ening) economic conditions, and offers businesses and other entities advice, strategies, and actionable methods on how to optimally adapt to such challenging, complex conditions.

Earnings Estimates Trends

S&P500 earnings trends and estimates are a notably important topic, for a variety of reasons, at this point in time.

FactSet publishes a report titled “Earnings Insight” that contains a variety of information including the trends and expectations of S&P500 earnings.

For reference purposes, here are two charts as seen in the “Earnings Insight” (pdf) report of December 14, 2017:

from page 22:

(click on charts to enlarge images)

S&P500 expected earnings

from page 23:

S&P500 annual earnings

_____

Please Note – The above is excerpted from the EconomicGreenfield.com (published by RevSD, LLC) post of December 14, 2017, titled “Trends Of S&P500 Earnings Forecasts

_____

RevSD, LLC offers the above data and projections for informational purposes only, and does not necessarily agree with information provided by these outside parties.

—–

RevSD, LLC is a management consulting firm and strategic advisory that focuses on the analysis of current and future weak(ening) economic conditions, and offers businesses and other entities advice, strategies, and actionable methods on how to optimally adapt to such challenging, complex conditions.

The December 2017 Wall Street Journal Economic Forecast Survey – Notable Aspects

The December 2017 Wall Street Journal Economic Forecast Survey was published on December 13, 2017.  The headline is “U.S. Economic Expansion Could Become Longest on Record.”

I found numerous items to be notable – although I don’t necessarily agree with them – both within the article and in the “Economist Q&A” section.

An excerpt:

Forecasters are increasingly optimistic the U.S. economic expansion could continue beyond the 2020 presidential election, aided by Republican tax legislation that is expected to lift growth over the next several years.

The slow-but-sturdy expansion that began in mid-2009 already is the third-longest in U.S. history and, if it continues into the second half of 2019, will exceed the 10-year record set by the 1990s economic boom.

Most of the private-sector economic forecasters surveyed in recent days by The Wall Street Journal said the odds of a new recession by late 2020 were below 50%. The average probability of a recession in the next year was 14%, with the odds creeping up to 29% in two years and 43% in three years.

As seen in the “Recession Probability” section, the average response as to the odds of another recession starting within the next 12 months was 14.12%. The individual estimates, of those who responded, ranged from 0% to 33%.  For reference, the average response in November’s survey was 14.64%.

As stated in the article, the survey’s respondents were 62 academic, financial and business economists.  Not every economist answered every question.  The survey was conducted December 8-11.

The current average forecasts among economists polled include the following:

GDP:

full-year 2017:  2.5%

full-year 2018:  2.6%

full-year 2019:  2.1%

full-year 2020:  2.0%

Unemployment Rate:

December 2017: 4.1%

December 2018: 3.9%

December 2019: 3.9%

December 2020: 4.2%

10-Year Treasury Yield:

December 2017: 2.42%

December 2018: 2.93%

December 2019: 3.26%

December 2020: 3.38%

____

Please Note – The above is excerpted from the EconomicGreenfield.com (published by RevSD, LLC) post of December 13, 2017, titled “The December 2017 Wall Street Journal Economic Forecast Survey

_____

RevSD, LLC offers the above commentary for informational purposes only, and does not necessarily agree with the views expressed by these outside parties.

—–

RevSD, LLC is a management consulting firm and strategic advisory that focuses on the analysis of current and future weak(ening) economic conditions, and offers businesses and other entities advice, strategies, and actionable methods on how to optimally adapt to such challenging, complex conditions.

Earnings Estimates Trends

S&P500 earnings trends and estimates are a notably important topic, for a variety of reasons, at this point in time.

FactSet publishes a report titled “Earnings Insight” that contains a variety of information including the trends and expectations of S&P500 earnings.

For reference purposes, here are two charts as seen in the “Earnings Insight” (pdf) report of November 17, 2017:

from page 24:

(click on charts to enlarge images)

S&P500 projected EPS trends

from page 25:

actual and projected S&P500 EPS

_____

Please Note – The above is excerpted from the EconomicGreenfield.com (published by RevSD, LLC) post of November 22, 2017, titled “Trends Of S&P500 Earnings Forecasts

_____

RevSD, LLC offers the above data and projections for informational purposes only, and does not necessarily agree with information provided by these outside parties.

—–

RevSD, LLC is a management consulting firm and strategic advisory that focuses on the analysis of current and future weak(ening) economic conditions, and offers businesses and other entities advice, strategies, and actionable methods on how to optimally adapt to such challenging, complex conditions.

The November 2017 Wall Street Journal Economic Forecast Survey – Notable Aspects

The November 2017 Wall Street Journal Economic Forecast Survey was published on November 9, 2017.  The headline is “Forecasters Predict Nafta Withdrawal Would Slow U.S. Growth.”

I found numerous items to be notable – although I don’t necessarily agree with them – both within the article and in the “Economist Q&A” section.

An excerpt:

Forecasters this month saw GDP growth of 2.5% this year and again in 2018. The pace of expansion was then seen easing to 2.1% in 2019 and 2% in 2020, closer to the average since the 2007-09 recession ended. Last month, economists said the proposed GOP tax plan would produce several years of stronger growth if enacted by Congress, though forecasters were divided over its likely long-term effects.

As seen in the “Recession Probability” section, the average response as to the odds of another recession starting within the next 12 months was 14.64%. The individual estimates, of those who responded, ranged from 0% to 35%.  For reference, the average response in October’s survey was 15.85%.

As stated in the article, the survey’s respondents were 59 academic, financial and business economists.  Not every economist answered every question.  The survey was conducted November 3-7.

The current average forecasts among economists polled include the following:

GDP:

full-year 2017:  2.5%

full-year 2018:  2.5%

full-year 2019:  2.1%

full-year 2020:  2.0%

Unemployment Rate:

December 2017: 4.1%

December 2018: 3.9%

December 2019: 4.0%

December 2020: 4.3%

10-Year Treasury Yield:

December 2017: 2.47%

December 2018: 3.00%

December 2019: 3.31%

December 2020: 3.47%

____

Please Note – The above is excerpted from the EconomicGreenfield.com (published by RevSD, LLC) post of November 9, 2017, titled “The November 2017 Wall Street Journal Economic Forecast Survey

_____

RevSD, LLC offers the above commentary for informational purposes only, and does not necessarily agree with the views expressed by these outside parties.

—–

RevSD, LLC is a management consulting firm and strategic advisory that focuses on the analysis of current and future weak(ening) economic conditions, and offers businesses and other entities advice, strategies, and actionable methods on how to optimally adapt to such challenging, complex conditions.

Earnings Estimates Trends

S&P500 earnings trends and estimates are a notably important topic, for a variety of reasons, at this point in time.

FactSet publishes a report titled “Earnings Insight” that contains a variety of information including the trends and expectations of S&P500 earnings.

For reference purposes, here are two charts as seen in the “Earnings Insight” (pdf) report of October 13, 2017:

from page 24:

(click on charts to enlarge images)

S&P500 EPS forecasts 2017 & 2018

from page 25:

S&P500 actual and expected EPS

_____

Please Note – The above is excerpted from the EconomicGreenfield.com (published by RevSD, LLC) post of October 13, 2017, titled “Trends Of S&P500 Earnings Forecasts

_____

RevSD, LLC offers the above data and projections for informational purposes only, and does not necessarily agree with information provided by these outside parties.

—–

RevSD, LLC is a management consulting firm and strategic advisory that focuses on the analysis of current and future weak(ening) economic conditions, and offers businesses and other entities advice, strategies, and actionable methods on how to optimally adapt to such challenging, complex conditions.

The October 2017 Wall Street Journal Economic Forecast Survey – Notable Aspects

The October 2017 Wall Street Journal Economic Forecast Survey was published on October 12, 2017.  The headline is “Economists See GOP Tax Plan Producing Growth Spurt, But Split Over Long-Term Effect.”

I found numerous items to be notable – although I don’t necessarily agree with them – both within the article and in the “Economist Q&A” section.

An excerpt:

An overwhelming majority of forecasters in The Wall Street Journal’s monthly survey of economists said the GOP tax plan unveiled last month would, if implemented, raise the growth rate for U.S. gross domestic product over the next two years. Some 60% saw a modest lift to output compared with its current trend, while 27% said the annual growth rate would jump by more than half a percentage point.

The announced framework, which lacks some details and could change as lawmakers flesh it out in the coming weeks, features lower tax rates on corporate profits, incentives for business investment and fewer individual income tax brackets, among other changes.

But roughly half of the economists said any growth spurt would fade over time. Asked about the tax plan’s likely effect on the economy’s long-run growth rate, 48% predicted a modest increase while 38% said the U.S. would remain on its current trajectory. Just 4% said the tax plan would boost the GDP growth rate by more than 0.5 percentage point a year, while 10% said growth would be slower than if there had been no tax changes.

also:

As for the federal budget deficit, 85% of economists said the GOP tax plan would cause it to widen over the next decade.

As seen in the “Recession Probability” section, the average response as to the odds of another recession starting within the next 12 months was 15.85%. The individual estimates, of those who responded, ranged from 0% to 33%.  For reference, the average response in September’s survey was 16.08%.

As stated in the article, the survey’s respondents were 59 academic, financial and business economists.  Not every economist answered every question.  The survey was conducted October 6-10.

The current average forecasts among economists polled include the following:

GDP:

full-year 2017:  2.3%

full-year 2018:  2.4%

full-year 2019:  2.0%

Unemployment Rate:

December 2017: 4.2%

December 2018: 4.0%

December 2019: 4.1%

10-Year Treasury Yield:

December 2017: 2.46%

December 2018: 3.00%

December 2019: 3.30%

____

Please Note – The above is excerpted from the EconomicGreenfield.com (published by RevSD, LLC) post of October 12, 2017, titled “The October 2017 Wall Street Journal Economic Forecast Survey

_____

RevSD, LLC offers the above commentary for informational purposes only, and does not necessarily agree with the views expressed by these outside parties.

—–

RevSD, LLC is a management consulting firm and strategic advisory that focuses on the analysis of current and future weak(ening) economic conditions, and offers businesses and other entities advice, strategies, and actionable methods on how to optimally adapt to such challenging, complex conditions.

“CFO Signals” Report – Excerpts

Recently Deloitte released their “CFO Signals” “High-Level Summary” report for the 3rd Quarter of 2017.

As seen in page 2 of the report, there were 160 survey respondents.  As stated:  “Each quarter (since 2Q10), CFO Signals has tracked the thinking and actions of CFOs representing many of North America’s largest and most influential companies.

All respondents are CFOs from the US, Canada, and Mexico, and the vast majority are from companies with more than $1 billion in annual revenue. For a summary of this quarter’s response demographics, please see the sidebars and charts on this page. For other information about participation and methodology, please contact nacfosurvey@deloitte.com.”

Here are some of the excerpts that I found notable:

from page 3:

Perceptions

How do you regard the current/future status of the North American, Chinese, and European economies? Perceptions of North America declined, with 64% of CFOs rating current conditions as good (still high), and 45% expecting better conditions in a year (down from 58% last quarter). Perceptions of Europe rose to 29% and 32%; China was flat at 32% and 30%. Page 6.

What is your perception of the capital markets? Eighty-three percent of CFOs say debt financing is attractive (down slightly from 85%). Attractiveness of equity financing rose for public company CFOs (from 42% to 48%) and decreased for private company CFOs (from 46% to 35%). Eighty-three percent of CFOs now say US equities are overvalued—a new survey high. Page 7.

Sentiment

Overall, what risks worry you the most? CFOs voice growing concerns about US political turmoil and geopolitical conflict; talent challenges again top CFOs’ internal worries, and technological change is a rising concern. Page 8.

Compared to three months ago, how do you feel about the financial prospects for your company? The net optimism index declined from last quarter’s +44 to +29 this quarter. About 45% of CFOs express rising optimism (down from 55%), and 16% express declining optimism (up from 11%). Page 9.

Expectations

What is your company’s business focus for the next year? CFOs indicate a strong bias toward revenue growth over cost reduction (60% vs. 20%) and investing cash over returning it (56% vs. 14%). They shifted back to a bias toward new offerings over existing ones (42% vs. 34%), and indicated a bias toward current geographies over new ones (62% vs. 19%). Page 10.

Compared to the past 12 months, how do you expect your key operating metrics to change over the next 12 months? Revenue growth expectations remain above the two-year average at 5.7% (up from 5.6% last quarter). Earnings growth slid from 8.7% to 7.9%, but remains above the two-year average. Capital spending growth fell from 9.0% to 7.3%, while domestic hiring growth rose from 2.1% to 2.6%. US CFOs trailed in almost all metrics. Page 11.

from page 9:

Sentiment

Coming off a survey high two quarters ago, optimism continued to decline— largely on growing pessimism in the US; Healthcare/Pharma and Technology improved, but Manufacturing and

(Please note that all responses were collected prior to Hurricane Harvey.)

This quarter’s net optimism declined significantly from last quarter’s +44 to a stillstrong +29. About 45% of CFOs expressed rising optimism (down from 55%), and 16% cited declining optimism (up from 11%).

Net optimism for the US declined sharply from last quarter’s +47 to +28 this quarter. Canada rose from +20 to +31, while optimism in Mexico declined from +50 to +39.

Healthcare/Pharma optimism rose sharply from +33 to +57, and Technology rose from +27 to +46. On the other hand, Manufacturing optimism fell sharply from +52 to +22, and Energy/Resources fell from +47 to just +19.

Please see the appendix for charts specific to individual industries and countries.

from page 11:

Expectations

Growth in key metrics, year-over-year

Bolstered by Canada and Mexico, domestic hiring surged and other metrics remain strong.

Earnings growth declined to 7.9% from last quarter’s 8.7%. The US declined but remained above its two-year average. Canada declined but remains strong. Mexico sits at its highest level in a year. Energy/Resources and Technology lead; Healthcare/Pharma and T/M/E trail.

Capital investment growth fell to 7.3% from 9.0%, still among its five-year highs. The US declined but remains above its two-year average. Canada declined but remains strong.  Mexico fell below its two-year average.  Energy/Resources, Healthcare/Pharma, and Financial Services are highest; Services, Technology, and Manufacturing are lowest.

Domestic hiring growth spiked to 2.6% from 2.1%. Canada hit its second-highest level in three years. Mexico rose to its highest level in a year. The US trails but hit its highest level in two years. Technology and Retail/Wholesale lead, while Healthcare/Pharma and Manufacturing trail. Wage pressures are evident in Mexico.

Please see the appendix for charts specific to individual industries and countries.

Among the various charts and graphics in the report are graphics depicting trends in “Own Company Optimism” on page 9 and “Economic Optimism” found on page 6.

_____

RevSD, LLC offers the above commentary for informational purposes only, and does not necessarily agree with the views expressed by these outside parties.

—–

RevSD, LLC (revsd.com) is a management consulting firm and strategic advisory that focuses on the analysis of current and future weak(ening) economic conditions, and offers businesses and other entities advice, strategies, and actionable methods on how to optimally adapt to such challenging, complex conditions.